have a great thanksgiving. we'll see you next fox news sunday. >> this week on the journal, editorial report, president obama's fuzzy math. he says closing the loophole isn't enough and that the tax rates must go up for top earners. does he really want to avoid the coming tax >> paul: plus the plus, the eteuscandal petraeus the largest oil producer, but will the obama administration let it happen or turn an oil boom into a bust?

welcome to the journal editorial report, i'm paul gigot. headed into friday, fiscal cliff talks with congressional leaders, president obama gave us a hit list of his negotiations strategies, repeating his intention to immediately raise tax rates on top earners. >> when it comes to the top 2%, what i'm not going to do is to extend further a tax cut for folks who don't need it which would cost close to a trillion dollars and it's very difficult to see how you make up that trillion dollars if we're serious about deficit reduction, just by closing loopholes and deductions. the math tends not to work. >> paul: but does the president's math add up? let's ask wall street journal columnist bill mcguerin, and analyst steve moore and washington columnist kim strassel. so, kim, the president won reelection, was this the hand

of magnimty reaching out to the republicans? >> it's crazy, it's what the president says all the time. if you listen to the press conference, he seems to say the biggest wish list for his liberal partisans has become docile letting these tax rates expire. while the republicans have moved, they are offering revenue, this is a change from their position, while the frame work is potentially there for a deal, the president is saying no compromise, no compromise. >> paul: what's his strategy, bill, here? what is he thinking? obviously, if we don't get a deal we do go off the tax cliff and the with the consequential danger to the economy. >> kim is right, you're right, the math doesn't add up, the politics adds up. $. >> how so? >> i'm afraid what's going to happen we're not only going to get bad policy, a tax increase and so forth. but we're going to-- the republican party as opposed to bad policy are also

going to get the blame for the consequences and this is why. because if the economy goes into the tank because we get the stuff, and the republicans will, because we don't get it, whatever way, the republicans are going to be blamed for being obstinate if they oppose some of the tax increases or if they go along, their own base is going to revolt over the tax increases. so, it's a no-win situation and the reason is, as kim sort of alluded to, this is a president who uses the word compromise as a substitute for actually compromising. and that's, that's solidified by a press corps that doesn't ask him a single question, what are you willing to give. you know, when john boehner appears, they say are you willing to accept higher rates. no one says what are you going to do about entitlements or anything, there's no question of the president whether he will compromise and what that would look like. >> paul: steve, what do you think the republicans ought to do here?

is there a way out for them or are they going to be pushed back into a corner where they have no choice, but to concede that they have to raise tax rates or else go over the cliff and get blamed for that? >> well, it's a tough situation for them. there's no question about it because as you know, the default position, if we don't do anything is for the taxes to go up on everybody on january 1st, and that's something i think both sides want to avoid. it's very interesting, the thing that happened this week to start the week, was who was the first person that barack obama met with in the white house since his election, the labor unions, the labor block, that tells a lot who is driving policy at least at the start of the second term? and the labor unions basically said we want no compromise on this, we'll take it to the people. so, i believe, paul, that this president is sporting for a fight on this. he wants to take this case to the people and the republicans, kim is right, the republicans have moved a long way and say, look, we'll

negotiate this, but when i talked to minority leader this past weekend in the senate, mitch mcconnell, he says we'll give anything, but one thing we're not going to do is raise these tax rates because they generally believe, and i think they're right about this, raising those tax rates could cause a double dip recession. >> paul: what's the alternative. if the president insists on raising tax rates and the republicans say no. all the president has to do is let the taxes go up on january 1st, he gets the tax increase anyway and beat the heck out of the republicans, for blaming whatever economic consequences happen and then in two months, they're coming back to him and saying, okay, we give in. but he's already got the tax rate. so my question to you, steve, is what's the way out here? is there a way out that if you see it for the republicans? >> well, the republicans and we showed in our editorial this week, the numbers do add up. the republicans should basically say, look, we will close the loopholes. if do you that the people that

get hit the hardest are the rich. but i think the most important outcome is to make sure that barack obama does own this economy. i mean, you've seen what happened to the stock market in the last week, since obama was reelected and he's been talking about raising the rates and we've lost over 650 points on the dow jones, so, i'm not so sure that the investment community or even the public really wants those rates to rise as much as barack obama does. >> and just on the math. if you close, if you put a cap on deductions of 50,000 a year per individual. over ten years the estimate is you get almost 800 billion in tax revenue, which is-- >> right, which is center left operation, but, that's, and that's roughly the same as you get from raising the tax rates the president-- >> looks you've outlined on the editorial base several possible compromises, the truth is that there are compromises that could be made, but i don't think that the president is interested in those, the actual economic things. this is a political fight that he wants, that he's pushing and he has a lot of cards. >> kim, so you think we're going over the cliff or not

right now? what are the odds. >> look, i think the president is playing a slightly dangerous game in that, if his argument or his bet here is that the republicans are going to be more responsible than him, he better hope they are, because otherwise, he could end up getting some blame for pushing us over the cliff. >> yeah, that's right. when the things tend to go bad, both sides get the blame and i think it's a high risk game particularly with economic growth. when we come back, a week after his resignation, former cia director david petraeus has to hiestify behind closed [ female announcer ] the humana walmart-preferred rx plan p-d-p gives you a low national plan premium... so you can focus on what really matters. call humana at 1-800-808-4003. this reduced sodium soup says it mahelp lower cholesterol, how does it work? you just he to eat it as part of your heart healthy diet. step 1. eat the soup.

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and his testimony for the house and senate intelligence committees bizarre revelations about the four-star general's affair with paula broadwell. we're back with phil and kim strassel and joining matt, what have we learned now? the election's over this week, about the benghazi attack. >> the drip, drip of information keeps coming out and coming out. and we've learned far more about the personal life than benghazi the last two months and the important thing this week, especially on friday was that general petraeus was reported to have told the senate intelligence committee in closed hearings that he thought it was terrorism within 24 hours. which questioned the narrative put out by the white house, subsequently and for the eight days afterwards, they said, no, no, al-qaeda had nothing to do with it. this was the fault of the, you know, anti-islam video on

youtube. >> paul: video. >> yeah. >> paul: bill, does that mesh with what we've been told the cia had been telling susan rice? >> i think the real problem for general petraeus in this story is that it not only does not mesh with what the white house was saying, it doesn't mesh with what we're told general petraeus said in the immediate aftermath, where he is said to have talked about a spontaneous flash mob. >> to members of congress. >> to members of congress behind closed doors as well and this is the problem. it's not only that we know that that's not true now, it's that at the time there were a lot of other indications that indicate that was not true, denied by the libyan prime minister, the cia station chief called it an act of terror. we had the fbi and i believe the national center for counterterrorism also giving briefings. >> paul: that's right. >> saying this. why was general petraeus's testimony then so at odds with other parts of the community?

>> but does this, would this give-- what does it mean for, say, susan rice and the administration then? is this, does this help them politically by shielding them or does petraeus here saying i thought it was a terrorist attack, does that mean this puts, for example, susan rice's statements more up to scrutiny? >> well, i think answers the fundamental question, did they deliberately mislead on this case for political reasons because they were driving the narrative that al-qaeda had been decimated and the war, war was receding or a question of incompetence. neither of those two things is good for the administration although it's after the election, so, they can get the consequences. >> let's take a look at the president talking about susan rice, the u.n. ambassador who many think he will nominate to succeed hillary clinton as secretary of state. >> for them to go after the u.n. ambassador, who had nothing to do with benghazi, and was simply making a

presentation based on intelligence that she had received and to besmirch her reputation is outrageous. >> paul: kim, that sure sounds like a president who is ready to nominate susan rice for the state department and my sources suggest that that's exactly what he's going to do. of course, my source haves been wrong before, but if-- and i've been wrong before. but if he does that, is this going to be a really big fight? >> oh, it's going be to be a huge fight because you have had republicans come out already and say, you drop her in the senate nomination battle and then we are going to go to the wall on this one, but i do believe you're right, not only is the president taking an unusual step of devoting during the press conference, but all types of forums to defend susan rice

and make the case for her, in this case, you're probably right, paul. >> paul: so, what do you think, matt, as we go forward. are we missing something here in terms of the larger focus on petraeus and his personal problems? what, is there a larger failing here about the administration in benghazi that may, for example, implicate secretary of state clinton, who has gotten off-- she says, from peru she wanted to take responsibility. but what does that mean? she's not testified at all, not really followed up at all. >> well, i think you have-- it really means there's been a -- they would love to blame it on petraeus,'s now been disgraced and out of the office and blame it on the cia. the problem was this goes back to the white house and certainly to hillary clinton, we have a failing. the failing was on the day of the attacks and a broader failure of our policy in libya. we were dragged into this, intervening last year, we very much disengaged early on. we didn't support the pro

western secular government in libya trying to the militias and suffered a terrible defeat in benghazi and forced to pull out the cia mission there and pull out-- >> not helping the opposition we've creeded the ground to the qataris who armed them who they favor and an islamist ins libya. >> and one point that relates to susan rice and the larger point. the president said why are you blaming susan rice who knows nothing about benghazi. why was susan rice chosen it go out there if she knows about it. why was not mrs. clinton tn or the deputies, either mo people who knew things didn't want to be on the record or read what she was given. >> she knew she was a loyal political operative and do exactly what-- >> where all of this leads to, whether it's general petraeus or hillary, there are questions whether people were

being truthful or compromised in some ways and that's not good for us. >> paul: let's hope people keep digging. when we come back, could it be good news, the report that u.s. is on track to surpass saudi arabia as the world's largest oil producer, but will the obama administration regulate this boom until it goes bust?

♪ >> we thought we'd bring you some good news this week. the international energy agency reported monday that the the u.s. is likely to surpass saudi arabia as the world's largest oil producer as early as 20/20 and predicts that the u.s. will increase production to 11.1 million barrels a day by 2020, up to about 6.9 million barrels in

2008. that is if the obama administration allows it. so, steve, you've been out to the shale in north dakota where it's coming from, and fracking so-called, and drilling and private risk taking. what does it mean for the u.s. energy markets? >> well, this is such a great, great pro american stir and by the way, paul, it's not just oil, it's also natural gas. >> paul: right, sure. >> my goodness we have more natural gas than the rest of the world combined and it's driven by the technological improvements and a five or ten year technological lead than the countries we're competing with. it's interesting, paul, if you look the at the last three or four years, now what industry has created more than any other industry in the united states. >> paul: the electric car industry, steve? (laughter) >> no, not that one. oil and gas and the thing that's so amazing, the

president is doing almost everything he can to try to hold this back with regulations and with not allowi allowing permitting most of the oil and gas development is going out on private land and where the president has to get with the program because we could literally create millions more jobs if we get this story right. >> paul: jim, the consequences here economically are big for downstream production, things like manufacturing. >> right. >> that had left the, i talked to one ceo, dow chemical, who had planned years ago never to build another plant in the united states and now making a 4 billion dollar bet on manufacturing and chemical production in the the united states. that's extraordinary. you're seeing that all over places like pennsylvania, and ohio. so, this could really be good. what's the risk politically in the coming years? >> to whom? >> to this, to this oil boom, natural gas boom? >> well, the risk of-- from the obama administration

is enormous. i think one thing that's interesting about this eia report is based on current assumption, it doesn't take into account what we could be getting if we were actually actively going after natural resources which, by the way, prior generations of americans set aside, exactly for us to use in places like in alaska, on shore the gulf, off shore off the coast, but the president has resolutely refused to tap any of those, what you see, is an administration thinking hard to think after way to wiggle into the fracking regulatory arena which up till now has been monitored and overseen entirely by the states with great success and that's got a lot of president's environmental allies unhappy and they feel they don't have control and so they're pushing the administration to insert itself into the area. >> the irony, is that natural gas production, bill, reduces greenhouse gas emissions and replaces coal, which is carbon

intensive. this could be a win-win for environmentalists and for people who want cheaper energy. >> although if you look at the environmental websites. >> they hate it, especially the-- >> the issue here, are we going to be texas or california? and satisfy for for four years, the president followed colorado's model. california has a lot of reserves and they've created what, 20,000 oil jobs in the the last ten years, where texas created 200,000 and these are fairly well paying jobs so that's the issue before the obama administration, the second point is the market works. the reason that we can now extract shale, not just technology, but with oil prices higher, it becomes economically possible to to these things that we wouldn't price-wise be possible beforehand. >> well, we've been handed this incredible gift by mother nature. let's hope we don't blow it on the politics. >> we will-- >> we have to take one more break. when we come back, our hits and misses of the week.

♪ >> time now for hits and misses of the week. kim, first to you. >> a miss to the federal emergency management agency which announced this week that surprise, it will probably have to ask congress for a bailout for its flood insurance program after hurricane sandy. the national flood insurance program has been broken since inception because it fails to require home owners in low lying areas premiums adequate to cover the cost and as a result encourages more home building in areas like this. federal taxpayers everywhere else have to foot the bill and they're 18 billion in the hole and 12 million thanks to health care sandy and this is one of those other disasters everyone saw coming and congress has nonetheless failed to credibly address. >> matt. >> a hit to the french this week, for recognizing that syrian opposition, fighting a long, drawnout war against president assad has been

joined by the turks and the gulf states as well which may open up a way to try and arm them and give more support and hopefully the u.s. will soon follow. >> paul: steve? >> the people in miami are hopping mad this week. we just spent 500 million dollars on a new baseball stadium for the miami marlins. they feel double crossed. this week the owner of the team sold off three of their best players in a big cost cutting move. what's ironic about the story, is that the miami dolphins want the taxpayers to pay for renovations for their football stadium down the street in tampa, they want a new baseball stadium all paid for by taxpayers, if you were a floridian would i would say to taxpayers financed stadiums, no mas. >> paul: they briefly, is the u.s. going to intervene in syria? >> no sign of it yet, but before the election